FULL 'This Week' Transcript for Nov.29, 2009

STEPHANOPOULOS: Tuesday night, the president travels to West Point
to announce his new strategy and more troops for Afghanistan. Now, the
cadets are likely to be a receptive audience, but will the country rally
behind President Obama? Will the new strategy work? And will Congress
come up with the cash to pay for it? That's topic A for our roundtable
today, and we're going to get to them in just a minute, but we begin
with two key senators, Republican Lindsey Graham of South Carolina and
independent Bernie Sanders of Vermont. Gentlemen, welcome, both.

SANDERS: Good to be with you.

GRAHAM: Good morning.

STEPHANOPOULOS: And Senator Sanders, let me begin with you. We've
seen the details of this strategy leak out over the last several days.
It sounds like President Obama is set to announce about 30,000 new U.S.
troops for Afghanistan, supplemented by about 5,000 or 6,000 NATO
forces, if they can get them. That appears to give General McChrystal
most of what he asked for. Can you support it?

SANDERS: I have real concerns with that, George. You know, if I
were to put Afghanistan into the context of what's happening in America
today, and what's happening now is not only a $12 trillion national
debt; we're in the midst of the worst economic recession since the Great
Depression of the 1930s. The middle class is collapsing. The gap
between the rich and the poor is growing wider.

Piece in the paper today, one out of four kids in this country are
on food stamps. One out of eight Americans. And when we go Christmas
shopping, we're going to be buying our products from China, who are
lending us money to fight the war in Afghanistan. So I've got a real
problem about expanding this war where the rest of the world is sitting
around and saying, isn't it a nice thing that the taxpayers of the
United States and the U.S. military are doing the work that the rest of
the world should be doing?

So what I want to see is some real international cooperation, not
just from Europe, but from Russia and from China, because what happens
in Afghanistan impacts what happens in Pakistan. That is enormously
important. The world should be involved. We should not be...

STEPHANOPOULOS: But you know the Russians are not going to be going
back...

(CROSSTALK)

STEPHANOPOULOS: ... to Afghanistan. So does that mean you're not
going to support this?

SANDERS: I have a real problem supporting 30,000 or 40,000 more
troops and $100 billion more a year for that war on top of what we're
spending in Iraq.

STEPHANOPOULOS: Senator Graham?

GRAHAM: Well, I'd like to hear the details from the president
Tuesday, but I would support an increase in troops, for the reasons that
Bernie just kind of indicated about Pakistan. The whole world is
watching what we're doing there. The Iranians are threatening to
withdraw from talks regarding their nuclear programs, and we'll be
evaluated by some pretty tough characters in the world as to how we
handle Afghanistan.

This is not just any place on the planet. This is the place where
the Taliban took control after the Russians left, aligned themselves
with Al Qaida, and attacked this nation and killed 3,000 Americans, and
I hope the president will tell the world, our troops and anybody
listening Tuesday, that will never happen again. With this new surge of
forces, Taliban will never take back over Afghanistan. We're going to
put measurements and benchmarks on the Afghan government, but we're
going to have troops in Afghanistan to win the conflict. I hope he says
that, without any uncertain terms.

STEPHANOPOULOS: Senator, how about this question of cost, as
Senator Sanders raised? It looks like the cost is going to be about $1
million per year for each additional service member, and a lot of
Democrats, like the chairman of the House Appropriations Committee,
David Obey, talked to our Jon Karl this week, said we ought to pay for
it. Take a listen.

(BEGIN VIDEO CLIP)

OBEY: If we have to pay for the health care bill, we should pay for
the war as well.

JON KARL, ABC NEWS: How?

OBEY: By having a new war surtax. The problem in this country with
this issue is that the only people who have been asked to sacrifice are
military families.

(END VIDEO CLIP)

STEPHANOPOULOS: Does he have a point there, Senator Graham? If
we're going to fight a war, shouldn't the American people pay for it?

GRAHAM: Well, I'd like to see an endeavor to see if we can cut
current spending and find some dollars that we're spending today to pay
for the war, and prioritize American spending. Where does our national
security rate in terms of spending? Are there things that we can do in
the stimulus package? Can we trim up the health care bill and other
big-ticket items to pay for a war that we can't afford to lose?

So I welcome a debate about how to control government spending and
pay for the war. I do want to let Bernie and anyone else listening know
that from my point of view, the president is correct in assessing that
Afghanistan is a war that must be won because the national security
implications of what happens in Afghanistan will follow this country for
decades, so I intend to support the president.

STEPHANOPOULOS: I want to -- I want to ask Senator Sanders to
comment on this, but first, let me press you on that. You're against --
let me first get Senator Graham on one point there. So you are against
the tax, but you are for cutting spending to pay for this, not
increasing the deficit? Senator Graham?

GRAHAM: I think it would be a good exercise for the Congress to
look at ways to trim up the spending, which has been out of control
since the administration came into power, and prior towards this war,
the way it should be. Our national security future depends on getting
it right in Afghanistan, and there is no better use of taxpayer dollars
than to defend America, in my view.

STEPHANOPOULOS: Senator Sanders?

SANDERS: Well, let's see. We spent perhaps $2 or $3 trillion in
the war in Iraq that Bush got us into that we never should have been in,
which we didn't pay. We sent that bill to our kids and our
grandchildren. And what Senator Graham is now saying is, as I
understand it, is hey, we can cut back on education so middle-class
families can't afford to send their kids to college. We don't have to
rebuild our infrastructure. We don't have to invest in sustainable
energy, so we stop importing $350 billion a year of foreign oil. We
don't have to do all that stuff. Let's just spend more money in
Afghanistan, while Europe and the people of China and the people of
Russia watch us do that work. I think that is a very poor set of
national priorities.

STEPHANOPOULOS: So, Senator Sanders, if I hear you correctly, if
you're against -- if you have a big problem with sending more troops,
does that also mean that you're against this surtax that Congressman
Obey is talking about in order to pay for the troops?

SANDERS: Look, we have a presence in Afghanistan now. No one is
talking about bringing the troops home tomorrow. What we need is more
international cooperation. We need an Afghan government that resonates
with its people, that is not corrupt. But if you're going to have a
presence there, you just can't pass the bill on, as we did in Iraq, to
our kids and our grandchildren. I think that's wrong. I think that's
immoral.

STEPHANOPOULOS: OK, let me turn to health care now. Senator
Graham, there is a new study out by Jonathan Gruber of the Massachusetts
Institute of Technology, based on Congressional Budget Office numbers,
which shows that premiums for most Americans are actually going to go
down under the Senate health care bill. So then, what you've got lined
up now, according to Congressional Budget Office numbers, the deficit
goes down over 10 years, costs get under control, and premiums will go
down for most Americans. Why can't Republicans support that?

GRAHAM: Well, because I don't believe that's true. To make that
happen, we're going to have to reduce Medicare spending by about $400
billion over a 10-year period to get the math right. We haven't reduced
Medicare spending by 40 cents, so that's not going to happen. You have
to increase taxes to get the revenue neutral. And when you look at the
second 10 years, the deficit goes up to $2 trillion, because in the
first 10 years, you collect taxes for four years before you pay out any
benefits. And when you look at the 10 years to follow, that's when the
spending goes up.

This whole idea of have we been spending enough and the Afghan war
is the problem to me is ridiculous. We have been spending money on
stimulus packages, growing the government in appropriations bills by
double digits, now a $2 trillion spending package on health care too,
and a half-trillion dollars in the second 10 years. We'll make premiums
go up, because taxes go up to pay for it, and we'll never cut Medicare
benefits to make it work, nor should we.

So I think the whole thing is a sham. And we've done nothing with
the doctor fix. Are we going to let the $200 billion doctor fix go into
effect over the next 10 years? The House just passed it without an
offset. So when you look at it, it makes an Enron accountant blush the
way they're trying to make these numbers work.

STEPHANOPOULOS: What's your answer, Senator Sanders?

SANDERS: I voted for the doctor fix. I don't think that Senator
Graham did. Bottom line is...

(CROSSTALK)

SANDERS: ... we are the only country in the -- well, we are the
only country in the industrialized world that does not guarantee health
care to all of its people, and yet we end up spending almost twice as
much per person as any other country on earth. We have 45,000 people in
this country who are going to die this year because they don't have
access to a doctor. Under Bush, the Republicans did virtually nothing
about health care, except see 7 million more Americans lose their health
insurance.

So of course, we've got to address the health care crisis. Every
person in this country is entitled to health care in a comprehensive and
cost-effective way.

STEPHANOPOULOS: The question is how, though, Senator Sanders. And
last week, I had Senator Ben Nelson. There are still some big
differences among Democrats on this bill. Senator Ben Nelson of
Nebraska, and he drew a line in the sand. He said he would support a
filibuster to block a final vote unless his conditions are met. Here is
what he said.

(BEGIN VIDEO CLIP)

NELSON: If the public option is wrong, if the CLASS act is still in
it, if there are a whole host of other items that are the same as they
are right now, I wouldn't vote to get it off the floor.

(END VIDEO CLIP)

STEPHANOPOULOS: Now, sir, you are a strong supporter of the public
option. Will you vote to prevent the bill from getting to a final vote
and actually support a filibuster if the public option is not included?

SANDERS: Well, let me just say this, George. The reason I am a
strong supporter of it, enhanced public option, is for two basic
reasons. Number one, the American people, for all the right reasons,
don't trust private insurance companies, because they understand the
function of a private insurance company is not to provide health care,
it's to make as much money as possible. Second of all, if we are going
to control health care costs, we need strong cost containment, and one
way -- not the best way, by the way, which would be a Medicare for all
single-payer system -- but we're not going to have that -- but one way
you control costs if by providing real competition to the private
insurance companies by allowing as many people as possible to be in a
strong public option. If you don't have that public option, I think
you're not going to have the cost containment we need. I would be very
reluctant to support legislation that did not have a strong public option.

STEPHANOPOULOS: Well, that's the final action. So will you prevent
the bill from getting to a final vote? Will you support a filibuster if
it's not included?

SANDERS: We're going to -- well, I've got to see what ends up
happening. I've got about 10 separate amendments. Other people have
amendments. And I think, George, I'm not just speaking for myself. I'm
speaking for other senators, I'm speaking for many members of the House,
we're going to fight and demand a public option and a strong one at that.

s: OK, we're just about out of time. Senator Graham, before we go,
I want to ask you both about chairman, Fed Chairman Ben Bernanke. He's
got a hearing this week, his confirmation hearing to be reappointed as
Fed chair, and Foreign Policy magazine has named him the world's top
thinker for 2009. I know that both of you had pretty heated exchanges
with the chairman over this past year. Senator Graham, you go first.
Is this honor well deserved, and will you vote to confirm him to
reappointment as Fed chair?

GRAHAM: I think he made some decisive decisions a couple of years
ago. At the time, it kept the economy from going into a depression.
But like any organization, he needs to have -- we need (ph) to have more
transparency and accountability about how the books are being used. I
think he's done a very good job, but the Fed needs to be looked at
closely in terms of their balance sheet.

STEPHANOPOULOS: Senator Sanders?

SANDERS: No, I absolutely will not vote for Mr. Bernanke. He is
part of the problem. He's the smartest guy in the world, why didn't he
do anything to prevent us from sinking into this disaster that Wall
Street caused and which he was a part of? No, I will not vote for
Bernanke to stay on as chairman.

STEPHANOPOULOS: OK, gentlemen, thank you both very much for your
time this morning. Hope you had a good Thanksgiving.

GRAHAM: Thank you.

SANDERS: Thank you.

STEPHANOPOULOS: We're going to go straight to the roundtable now.

STEPHANOPOULOS: And as our panelists take their seats, take a look
at the last time a president went to the country to announce a major war
escalation.

It was January 2007.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE W. BUSH: The situation in Iraq is unacceptable to
the American people and it is unacceptable to me. So America will
change our strategy to help the Iraqis carry out their campaign to put
down sectarian violence and bring security to the people of Baghdad.
This will require increasing American force levels.

America's commitment is not open-ended. If the Iraqi government
does not follow through on its promises, it will lose the support of the
American people.

(END VIDEO CLIP)

STEPHANOPOULOS: Substitute Afghanistan for Iraq, you're likely to
hear many of those exact same sentences on Tuesday night when the
president goes to West Point. Let's talk about it here on the
roundtable. I'm joined as always by George Will; Dan Senor, fellow at
the Council on Foreign Relations, also author of a new book called
"Startup Nation: The Story of Israel's Economic Miracle" with Saul
Singer. Matthew Dowd, welcome back. Paul Krugman from the New York
Times and Princeton, and Cokie Roberts.

And George, we do know the outlines pretty well what President Obama
is going to announce on Tuesday night. It looks like General McChrystal
got most of what he wanted, probably 30,000 troops or so, some NATO
troops. Clearly the president didn't take your advice. You were
arguing for much more limited involvement.

WILL: Not for the first time.

(LAUGHTER)

WILL: For the second time in nine months, he's going to announce a
new strategy for a war now in its ninth year. He says he's going to
finish the job. His job on Tuesday night is to tell us what the job is
that he's going to finish.

I think it's going to be -- you talked about the familiar rhetoric
-- it's going to be the Bush program, which is, as he used to say, as
the Iraqis stand up, we will stand down. He's going to say, as the
Afghans stand up, we'll stand down. Meaning we're there to train them
and get out.

Mr. Gibbs said at the White House, the press spokesman, we will not
be there nine more years.

The problem is, the Afghans know that. And they know that the
Taliban will be.

STEPHANOPOULOS: That is the problem. And let me bring Matthew Dowd
in here on this question, because the president has got to speak to many
different audiences on Tuesday night, and it seems on the one hand, he's
going to be arguing to the Afghans, the Taliban and the Pakistanis, we
are there to stay, while at the same time arguing to the American
public, no, we're going to go.

DOWD: He has got a really difficult problem because he's got an
international audience, as you say, that he's got to talk to, and also a
domestic audience that's already flipped on him from where he was at the
beginning of this presidency, when the majority of people supported what
he was doing in Afghanistan. Now the majority of people oppose what
he's doing in Afghanistan.

The interesting thing I find about this is that all of this thing
that people said he's putting all of this thought and decisiveness, he
basically -- it took him 94 days to reach the same decision George Bush
would have done. Exact same decision George Bush would have done
probably in two days, or three days, or a week.

(CROSSTALK)

ROBERTS: It took him a long time to come to the surge.

DOWD: No, to the realization that the military generals wanted to
do this, and that's what I think is his biggest problem, is the American
public has flipped on this, and now he's basically going to be
advocating a Bush policy that failed in the last administration.

ROBERTS: I think, though, in the interim, between the time that
McChrystal asked for this and Tuesday, that there's been a lot of heat.
They have used this period to put a lot of heat on Karzai's government.
And also that election, that peculiar election was going on in the
middle of all this. And then when that got solved, as oddly as it got
solved, they then were in there in full force to try to say, look, you
know, you want us to do this, but for us to do this, you have to do --
you have to improve.

STEPHANOPOULOS: And that is probably going to be what's most new in
the president's strategy, Dan, on Tuesday. What else, as you look at
it, because the president's going to have to argue that this is a brand
new strategy, that he's gotten something for this. What else should we
be looking for there?

SENOR: Whether or not he sets realistic expectations. The reality
is, even with this troop deployment, summer of 2010 is going to look
much worse in Afghanistan than summer of 2009. Casualties, American
casualties will go way up. The reality is, the fighting season, the
sort of kinetic fighting patterns by the Taliban are at their peak
between March and November. So that means -- and by the way, they're
doing a very slow timeline here. They're deploying about a brigade a
quarter. I mean, the Iraq surge was a brigade a month. So you talk to
the Iraqi commanders, they say one of the most powerful imports in the
Iraq deployment was within five months, you had five brigades on the
ground.

STEPHANOPOULOS: (inaudible) speed up this deployment.

SENOR: Well, they're talking about a brigade a quarter. So that
means...

ROBERTS: Which is how many people?

SENOR: About 3,000 to 5,000 troops. So summer of 2010, we won't
have that many more troops there. It will be a bitter fighting season.
And the real comparison, actually, if the president wants to look at
progress, will actually summer -- comparing summer of 2011 to summer of
2010.

But this is -- comes back to something that George said. This will
require the president to really explain and educate and inform on
Afghanistan, something he's not been prepared to do. He's really only
given two major speeches on Afghanistan. In March, when he announced
the first troop increase, and then this summer in front of the Veterans
of Foreign Wars. He hasn't really talked about it.

STEPHANOPOULOS: He hasn't talked about it that much, but of course
that is what he's going to be doing Tuesday, an expansive speech. He's
going to have to define down his goals as well.

KRUGMAN: Yes, and that's, but, you know, if there's one thing that
this president is good at is explaining things. That's what he ought to
be able to do. And look, I mean, I feel a little bit sorry for him.
This was inflicted upon him. This was -- he was left a legacy, as
George says, of basically a failed war, a war that might have been won
quite easily in 2001, 2002, if Bush hadn't had his eyes on Iraq
instead. And now he has got to play catch-up. I'm sure he would prefer
not to be doing this at all. He's kind of in a political box. What can
you do?

ROBERTS: I don't think it was so much inflicted on him. After all,
all through his campaign, he talked about Afghanistan as the war of
necessity. I mean, he upped the ante. He really did.

(CROSSTALK)

ROBERTS: And I think that he, therefore, he has to deliver on
Afghanistan. And I also think that one of the things that he can
explain is that the difference that it will make for women and girls in
Afghanistan if we leave is devastating.

(CROSSTALK)

STEPHANOPOULOS: I got to say, I bet that's one thing he's not going
to do. He might give a glancing blow to it. I think he's going to try
to say all we can do is stabilize that country. We can't create, as
Secretary Gates has said, a Valhalla in Afghanistan.

ROBERTS: No, of course not. But people in this country were very
excited when they saw those girls going to school for the first time in
years, and all of that. And the sense that America was doing something
good in the world, which we are all over the world, but a lot of people
don't realize that. And the idea that those people would just be locked
up again and repressed is something to make a case for.

DOWD: I actually think David Obey actually -- to go into the
politics -- has put his finger on the...

STEPHANOPOULOS: The House Appropriations chairman.

DOWD: The House Appropriations chair, who basically came out and
said, if you're going to do this, you need to find a way to pay for it.
And I actually think he put his finger on the problem that we ended up
with in Iraq and the problem that we have with Afghanistan for this
president, which is we called for no sense of shared sacrifice by the
country. And when we don't ask for a sense of shared sacrifice, whether
it's somebody, you know, bringing (ph) rubber like they did in World War
II...

(CROSSTALK)

DOWD: They are more likely to believe in the goal and they're more
likely to flake earlier on. And I think he is probably not going to do
this, but he would be certainly better off if he called the country to a
sense of shared sacrifice on this.

WILL: We're also asking our allies in NATO to sacrifice, what,
5,000 troops. NATO's 60 years old. This is its first war. Never been
to war before, and it's not really going to war now.

(CROSSTALK)

SENOR: I think this proposed tax increase is completely -- first of
all, I don't think the Obama administration is going to get behind it.
But when you think about the math here, Orszag, the OMB director, is
projecting about $1 million per troop. So they're saying it's $30
billion annually if we do 30,000 troops.

(CROSSTALK)

SENOR: But the reality is, the congressional Democrats who we are
talking about who are uneasy with this decision, would have probably
accepted 10,000 or 20,000 troops. So you're not (inaudible) $30 billion
more. We're probably talking about $10 or $15 or $20 billion more.
That's about the size of our entire foreign aid budget. Could you
imagine the precedence this will set? If every time we have a foreign
policy issue, we're going to impose a surtax on it?

(CROSSTALK)

KRUGMAN: This is a lot of money. And the point is, we should have
been paying for these wars to begin with, right from the beginning. I
mean, this was, if you want to talk firsts for Bush, this was the first
time in American history that a president took us into a war and cut
taxes. And it might actually -- it would be unpredictable and risky,
but to actually say, no, we're going to pay for this, because we're in
this for, you know, a serious commitment, it might actually...

(CROSSTALK)

SENOR: They said the Israelis and the Palestinians are not making
enough progress on their peace process track, so we're going to say to
them, we're not going to put more money into foreign aid, into the
Palestinian Authority and Israel unless -- unless they get serious, and
we will impose taxes on this country because this country views this as
a high priority. You start to see where this goes if every time...

(CROSSTALK)

KRUGMAN: There's a big difference between foreign aid and a war.
Wars are expensive. Iraq was supposed to be cheap. It's turned out to
be at least $1 trillion, probably well more than that. So...

SENOR: But let's be honest what this is about. It's about a
campaign against President Obama's troop surge. That's what it's
about. It's not really about...

(CROSSTALK)

WILL: And there's going to be no surtax. I mean, we all agree on
that. It's not going to happen, OK? So, everyone, relax.

(LAUGHTER)

DOWD: I agree there is not going to be a surtax, but I think this
goes to a fundamental value that I think we've lost, which is that we
can get things for nothing, that we can go to war and not have to pay
for it, either by cutting the budget or doing something else. We have a
war, we don't have a draft. All of these sorts of things, that we,
think, oh, by the way, we can go fight the most important war in the
history of our country, but we're not going to have a draft, we're not
going to pay for it, we're not going to do anything that causes anybody
to sacrifice.

SENOR: If Pelosi and Obey were being intellectually about this,
they would wage a war against the president's surge policy Wednesday
morning, as opposed to doing this via some proposed surtax.

ROBERTS: Well, also, a surtax is not the total sacrifice of the
whole population. I mean, that's the really what you're talking about
much more, Matt, is everybody getting in together.

(CROSSTALK)

DOWD: ... idea I think underlines the problem that we don't ask
people. When we say these things are important, we don't ask the
country to come together for them.

STEPHANOPOULOS: When this is all done, the president will probably,
as we said, have about 30,000 more troops on top of the 68,000 to 70,000
there. Close to 100,000. 2012, when he's running for re-election, I am
going to ask you all quickly, how many troops will be in Afghanistan?

WILL: Including NATO? 100,000.

SENOR: I agree. 100,000, and it will be amazing, because President
Obama will be running for re-election having doubled our presence in
Afghanistan and not actually meaningful reduced our presence in Iraq.

DOWD: It will be 100,000 troops. And his polling on Afghanistan
will be 10 points lower, just as it was with Bush when he left Iraq,
when he left the administration.

KRUGMAN: I don't have a view. I really don't have a view.

ROBERTS: I'll just say 100,000 too. I just don't see how you get
around that.

STEPHANOPOULOS: I'm going disagree with all of you. I say it will
come down to about 80,000. But we'll see. That is going to be one of
the key questions he faces on re-election.

We're going to have more roundtable in a minute. Our Nobel Prize
winner is going to weigh in on the economy. We're going to debate the
president's trip to Copenhagen, and this climate change e-mail
controversy. Plus, those White House party crashers. And again, we
head to break with a bit of the best movie ever on party crashing.

(MUSIC)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(UNKNOWN): Mr. And Mrs. Salahi.

(UNKNOWN): A pair of Washington socialites actually crashed
President Obama's first state dinner.

(UNKNOWN): You can't allow anyone, uninvited, who has not gone
through a security clearance, to be walking into the White House. The
potential could be catastrophic.

(UNKNOWN): The Secret Service is acknowledging a huge security blunder.

(UNKNOWN): Folks who know them aren't as surprised. And just sort
of roll their eyes and chuckle, and say, I can't believe this is the
latest thing in this couple's, you know, rise to fame.

(END VIDEO CLIP)

STEPHANOPOULOS: And surprise, surprise, they're trying to sell
their story now. We'll get to the Salahi party crashers in just a
minute, but first, let me bring the roundtable back. George Will, Dan
Senor, Matthew Dowd, Paul Krugman and Cokie Roberts.

And I want to begin, though, a lot of economic news this week, and
since we have a Nobel Prize winner here, this Dubai sovereign wealth
fund midweek says they want to reschedule their debt payments. Stock
markets around the world start to drop, recover a little bit on Friday.
What's going on here?

KRUGMAN: The question is, by itself, Dubai is not that big a deal.
It's a fairly big, you know, if a bankruptcy in the end, it's a fairly
big bankruptcy, but not a huge one. So it only matters to the extent
that people see it as an omen or an indicator.

And the first reaction was, oh, my God, this is a sovereign
government defaulting on its debt, and therefore everyone's at risk,
because we're all running deficits, we've all got bigger debts than we
did a couple of years ago. That has mostly faded out now.

The second thought was, basically, this is not a country. First of
all, the company is not a country. But basically, DubaiWorld is not --
is actually not a legal obligation of the Dubai government to back it.
Everyone thought they would, but it's not their legal obligation. And
secondly, Dubai itself is, you know, looked at economically is basically
a highly leveraged investor and commercial real estate, right, which is
-- and all highly leveraged investors in commercial real estate all
around the world are in big trouble. So Dubai is just looking like some
developer, somebody who put up a bunch of shopping malls...

STEPHANOPOULOS: But I think you hit on a key point. I think what
worried everybody, Dan Senor, I know you've done some work there as
well, is the idea all of a sudden that the government might not back up
its own sovereign wealth fund.

SENOR: I agree with Paul. We have limited exposure, the U.S. has
limited exposure. European banks have exposure. The U.S. banks have
very little exposure.

I think the real problem here is you're looking at the cost to
insure other sovereign debts from emerging market economies exploded
over the weekend. Bulgaria, Hungary, Russia, Greece. I mean, what if
one of these economies implodes? So you can argue -- you argue that
Dubai is a glorified like shopping mall, and it's not a real country, or
a real emirate. But the reality is, if you start having these emerging
markets blow up left and right, at a time when there's already such
insecurity that a little blip like this can cause panic...

STEPHANOPOULOS: And that's what we saw on Thursday.

WILL: Right. Paul used the magic words from 2010, that's
commercial real estate. We have in the next two or three years about
$1.5 trillion of commercial real estate loans (ph) that have to be
refinanced. They are being refinanced on buildings that are worth 30 to
40 percent less than they were when the loans were taken out.

This week, we revised downward from 3.5 to 2.8 the growth in the
third quarter. Wall Street Journal reports that one in four Americans
with a mortgage are under water, that is their mortgage is bigger than
the value of their house. So the signs out there are still ominous.

(CROSSTALK)

KRUGMAN: ... issue, I mean, sorry, just to say that the question
was, whether Dubai triggers another wave of financial crisis? The
answer is, almost surely not. The question is, is the economy OK?
That's very different.

STEPHANOPOULOS: And there of course the number one indicator there
is the one we have been focused on for so long, unemployment, above 10
percent. And, Cokie, as we wait for the president's jobs summit on
Thursday, we're already seeing the House of Representatives say we want
to vote on something this year...

ROBERTS: No, they're desperate...

STEPHANOPOULOS: ... about another $200 billion...

ROBERTS: They are desperate to have a jobs vote. And it's one of
the reasons, it's one of the impetus behind the health care bill is to
get it done so they can get a jobs bill, because, as you know, going
into an election year with double-digit unemployment is obviously a
terrible problem for the majority party.

But they don't really know exactly what to do. I mean, they have
already extended unemployment. They've already extended tax credits for
first-time home buyers. Now they're talking about trying to lean on
lenders on mortgages, but their solution there is to try to make them
feel shame. And it doesn't seem to be working for any of the -- Wall
Street people don't seem to feel shame.

STEPHANOPOULOS: The president's going to push on them again
tomorrow, on the banks.

DOWD: I think this is the president's political problem that he
has, and I don't think this jobs summit is going to do anything to solve
that problem. I actually think the American public thinks that the
stimulus package that was passed eight months ago was supposed to be a
jobs bill, and never actually created any jobs that the American public
has seen. So, now, he's going to have a meeting, a summit, an event,
he's going to have a meeting and say, oh, here's some stuff we're going
to do. And I think the public sits there and is going to say, well, I
don't have a job, my brother doesn't have a job, what have you been
doing for nine months?

STEPHANOPOULOS: But, but (inaudible) the White House political
problem there, is that they're arguing that it could have been worse...

(CROSSTALK)

DOWD: Nobody out there in America, will say oh, yes, we would have
lost more jobs if you hadn't done that. All they're thinking about is...

(CROSSTALK)

STEPHANOPOULOS: So what would make a difference right now?

KRUGMAN: If you could get $300 billion...

(CROSSTALK)

KRUGMAN: If you could get some significant amount of money. It
doesn't have to be as big as the first one. There are things you can do
to create jobs more cheaply than the kinds of things they did before.
You can have tax credits for businesses that hire more people. You can
have direct employment programs, WPA type stuff, you know, short-term
employment things that are quite cheap per job created, because they
create poor-paying jobs, but it's better than nothing. You can provide
another round of aid to state and local governments, which are going to
be in desperate straits and are going to be really laying off a lot of
people.

STEPHANOPOULOS: Prevent teacher layoffs.

KRUGMAN: So you can -- Economic Policy Institute has a plan that is
going to be announced tomorrow that is a $400 billion thing. And it
looks plausible. It could create quite a few jobs. It would make a big
difference.

(CROSSTALK)

STEPHANOPOULOS: ... businesses wouldn't just (inaudible)?

KRUGMAN: There are some mixed evidence. But what we know is that
-- and what everybody talks about is Germany, which basically has a
system of subsidizing, subsidizing companies to keep workers on. Not to
-- reduce their hours, but don't lay them off. Which has been
spectacularly successful.

Germans have had as deep a recession as we have had, but with hardly
any increase in unemployment. And that suggests that, yes, providing
some financial incentives to keep workers on, to add more workers for
those companies that are expanding, would work.

WILL: It's an old axiom in Washington, the title of legislation is
like the title of a Marx Brothers movie. Tells you nothing about what's
in it. "Duck Soup," "Horse Feathers."

We will have a legislation that will try -- and this will be a
challenge -- to not use the S world, stimulus. Because we've had -- and
I keep saying this, and...

(CROSSTALK)

ROBERTS: We've had three.

WILL: This is our third that's coming up, because we had the one in
February of 2008 that was bipartisan, Pelosi, Bush, stimulus didn't
work. The second one didn't work. Now, the administration is saying...

(CROSSTALK)

ROBERTS: It did work.

WILL: But that is the administration's problem. They're saying the
stimulus worked, but we need another one.

ROBERTS: But, I mean, Dan was citing the growth rate. That growth
rate in the third quarter was because of the stimulus. I mean, the
biggest problem that we're looking at now is without a stimulus, what
happens to the economy? Is it all just temporary? And, you know, I
mean, there are so many major economic problems still facing us, that
aside from the jobs issue, that...

STEPHANOPOULOS: Well, let's pick one that could be -- end up being
in conflict with what the House and the Democrats want to do on jobs,
and that is the question of the deficit and debt. Interesting cover of
Newsweek this week. Niall Ferguson from Harvard says how great powers
fail, and he goes on and says, the beginning of a debt explosion. It
ends with an inexorable reduction in the resources available for the
army, navy and air force. If the United States doesn't come up soon
with a credible plan to restore the federal budget to balance, he says,
in the next five years, a debt crisis could lead to a major weakening of
American power. And he cites you throughout the piece as somebody who's
not paying enough attention, Paul Krugman, to the deficit.

KRUGMAN: You know, first thing to say is people are putting their
money where their mouth is, which is the bond market. Things were
fine. You know, the U.S. government is able to borrow long-term at 3.3
percent interest rate. So, obviously, you know, the market is not
convinced.

Now, the market has been wrong. But, then if you do the arithmetic,
these numbers look huge. The American economy is huge. The debt
burden, even after five years, is going to be well below as a share of
GDP well below levels that lots of industrial countries have reached in
the past, including ourselves after World War II, when we were able to
handle that just fine.

(CROSSTALK)

STEPHANOPOULOS: ... 100 percent.

KRUGMAN: We're not going to hit 100 percent until a decade from
now. And countries have gone above 100 percent. I mean, if you
actually ask about the interest cost, particularly inflation-adjusted
interest cost, you know, we're now paying 1.2 percent real interest rate
on federal debt. Even if you add 50 percent of GDP in debt, which I
don't think is going to happen, that's still only a fraction of a
percent of GDP in additional debt service costs.

WILL: But even unreasonably cheerful assumptions about economic
growth and interest rates, we're apt to be spending in 10 years $700
billion a year servicing our debt.

KRUGMAN: That's in a $20 trillion economy. It doesn't sound as bad
as it is.

(CROSSTALK)

ROBERTS: This has a political and policy implication. Excuse me,
because what happens is, members of Congress will sit there and say, we
can't do X because of the deficit. And so, there are huge implications.

(CROSSTALK)

KRUGMAN: The Times had a front-page story about the debt bomb. And
it had a chart which was meant to be very scary, and it showed that on
current projections, by 2019, the share of the economy that is spent on
debt service will be up to the levels not seen since the first George
Bush was president.

SENOR: The Republicans in Congress are not going to evaluate this
based on it's just a jobs stimulus. Even if it were to be proposed as
(inaudible), they're going to say, look, we spent $160 billion on AIG,
we spent $400 billion on saving the GACs (ph), Freddie and Fannie. We
spent $3 trillion in Treasury and Fed support and guarantees, on top of
that the stimulus. I mean, at some point, the notion...

KRUGMAN: Republicans are going to vote against anything.

SENOR: But I think you're going to see even a lot of Democrats,
too. I mean, these numbers are going to become astonishing.

(CROSSTALK)

ROBERTS: The fact that we had Ron Paul's amendment pass in the
House of Representatives in committee this week tells you that there's a
huge upset in both parties with the financial institutions, with the
Fed, with everything that's going on economically.

(CROSSTALK)

DOWD: Politically in the end, politically in the end, the deficit
doesn't matter, if the economy is growing and jobs are being created.
It matters when the economy is bad. So if the deficit continues to grow
and the economy stays bad, Republicans and the American public can say,
we've messed up. The government isn't doing what it should (ph). Look
at the deficit. Look at this. This is the problem. So if the economy
started to grow and we had a deficit, then I think politically, he's
fine with that.

(CROSSTALK)

KRUGMAN: Important political fact, which is that whatever you would
do with the deficit, the public won't notice. In 1996, a majority of
Republicans thought that the deficit had increased under Clinton, even
though we had in fact...

ROBERTS: Balanced the budget.

KRUGMAN: ... been on an incredible run. So no, I mean, the deficit
doesn't matter. The economy matters. And that's why somehow or other,
Obama has got to get jobs being created.

STEPHANOPOULOS: And meanwhile, he is also going to be dealing with
health care, right now on the floor of the Senate. He announced this
week to Copenhagen to deal with climate change. And it comes at a time
when the politics seem to be changing a little bit in this.

Let me show our latest ABC News/Washington Post poll. It shows
whether people believe global warming is occurring. That number is
going down. July 2008, 80 percent of the public; down to 72 percent
now. And there's been a sort of a real partisanship. Look at
Republicans, 74 percent believed global warming was occurring back in
2008. Now, a 20-point drop to 54 percent.

George, there has been a partinizing of this issue, and let me turn
to one more complication we've had over the last week. This Climate
Research Institute at East Anglia University, someone hacked into their
e-mail account and showed a bunch of emails between scientists, which
opponents of climate change legislation said proves that they are
rigging the science and trying to hide information that runs counter to
their theories.

WILL: It raises the question of -- we're being asked to wage
trillions of dollars and substantially curtail freedom on climate models
that are imperfect and unproven. And the consensus far from being as
solid as they say it is, and the debate as over as they say it is. The
e-mails indicate people are very nervous about suppressing criticism,
gaming the peer review process for scholarly works and all the rest.
One of the e-mails said it is a travesty, his word, it is a travesty
that we cannot explain the fact that global warming has stopped. Well,
they shouldn't be embarrassed about that. It's a complicated business,
and that's why we shouldn't be (inaudible).

KRUGMAN: All those e-mails -- people have never seen what academic
discussion looks like. There's not a single smoking gun in there.
There's nothing in there. And the travesty is that people are not able
to explain why the fact that 1988 was a very warm year doesn't actually
mean that global warming has stopped. I mean, that's loose wording.
Right? Everything is about -- we're really in the same situation as if
there was one extremely warm day in April. And then people are saying,
well, you see, May is cooler than April, there's no trend here. And
that's what -- the travesty is how hard it has been to explain...

WILL: One of the emails, Paul, said he wished he could delete, get
rid of the medieval warming period. That lasted 600 years...

KRUGMAN: It's not -- read -- this has all been explained. What he
meant is they want to put a start on it. We have an end to it, we don't
have a start on it. There's a lot of loose use of language when you're
just talking among each other. And what (inaudible) really meant,
deleting would be meant that, you know, we don't know when this thing
started, because we don't have very good data back then. There weren't
any weather stations. And that's what the context was.

DOWD: The interesting thing about this is, which goes back to our
previous discussion is, and having done a lot of this polling during the
Bush administration, which is when you give people a choice between
improving the economy and jobs, and improving the environment, at times
of economic prosperity, the numbers for improving environment go above
jobs. At a time when there is a recession or at a time when there's a
difficult in the economy, people say let's focus on this, let's not
focus on the climate. The best route to passing climate change
legislation is creating jobs and then (inaudible).

ROBERTS: But the difference between that kind of polling and what
George just showed in our ABC poll is that -- is that people are not
agreeing on the facts. It's not a question of asking about the
legislation.

(CROSSTALK)

DOWD: If they want to go to a different position, they have a
tendency to then doubt...

STEPHANOPOULOS: Well, that's what might be happening here, is
people who are opposed to cap-and-trade are changing their minds on
global warming.

(CROSSTALK)

SENOR: In June of this year, the House voted, close vote on
cap-and-trade, 219:212 votes. One out of five congressional Democrats
voted against the cap-and-trade bill. If that vote were held today,
against the backdrop of this news, plus even worse economic numbers to
Matt's point, I guarantee you...

(CROSSTALK)

(UNKNOWN): Nancy Pelosi was very clever to get that in her pocket
when she could.

ROBERTS: But for the president to then be going to Copenhagen with
all of this going on, becomes somewhat problematic for him, I think.

WILL: But what I was going to say there is that the United States
pledges to reduce its carbon emissions 83 percent below the 2005. That
will not even be seriously attempted, and here is why. That would mean
we would have total carbon emissions equal to the United States in 1910,
when there were 92 million Americans. Furthermore, our per-capita
carbon emissions in 2050, when he says this is going to happen, when
there's going to be 420 million Americans, would be on a per-capita
basis what we had in 1875.

STEPHANOPOULOS: (inaudible) credibility problem as well. I mean, I
think the issue is, I think the president had to go to Copenhagen. It
was the only way to get the Indians and the Chinese to go as well. But,
Paul, as he goes, he'll be making a commitment that he can't necessarily
keep unless the Senate follows through.

(CROSSTALK)

KRUGMAN: Everyone understands that. And I just want to say, I'm
surprised, George, that you lack faith in the power of the marketplace.
All this cap-and-trade is about is putting a price on carbon emission,
and people will do amazing things given a market incentive.

WILL: Speaking of the marketplace, the biggest industry in the
world right now may be fighting climate change. There are billions,
trillions of dollars on the table, and when you say, well, they are
academics and they are scientists and they talk in funny ways --
academics are human beings, and the enormous incentive to get on the
bandwagon on global warming, the financial incentive, the market driving
this, is huge.

KRUGMAN: There is tremendously more money in being a skeptic than
there is in being a supporter. It's so much easier, come on. You got
the energy industry's behind it. There are 20 times as many believers
as there are skeptics in the scientific community. They get almost
equal time in the media.

(CROSSTALK)

WILL: Is there a larger venture capital firm in this country than
the Energy Department of this government, which right now is sending out
billions and billions of dollars in speculation on green energy?

ROBERTS: But I think that's something that the American people
want. I mean, we want green jobs. We don't want to see those polar
bears on those ice floes without any ice around them. All of that. I
think, coming up with ways to have the energy that we use without
causing global warming and polluting the air is something that is
something desirable.

(CROSSTALK)

DOWD: I agree, the public wants that. But if Uncle Joe doesn't
have a job, they say let's -- don't worry about the polar bears right now.

(LAUGHTER)

STEPHANOPOULOS: We have just about a minute left. And just quickly
on this pretty crazy story at the Indian state dinner. A couple was
able to crash the gates. And, George, at first, you know, you laugh at
it, how can they possibly do this? You know these guys are going to go
sell the story. But it's a pretty serious security breach.

WILL: At the end of the day, it's not funny. There is an old axiom
that applies elsewhere but not in Washington, that when there's no
penalty for failure, failure proliferates. This was a failure of
security of major proportions. And let's see whose job is lost.

ROBERTS: I feel sorry for the Secret Service. Look, you know,
you're in this situation, that at a White House gate. It's raining.
People are pushing in. And they're all somebody fancy. And you're more
likely to get in trouble if you hold them up and question them and have
them be, you know, all uppity with you.

STEPHANOPOULOS: But that may be why that person -- the Secret
Service should not have been unaccompanied at the gate by someone with
the actual list.

KRUGMAN: (inaudible). And this president receives I believe a
record number of death threats. Let's just say, this -- we don't know
how seriously to take it, but you should not be taking any -- cutting
any corners on protecting this president.

DOWD: To me, it's a bigger commentary on society. When basically
people now seek fame for fame and celebrity sake, but they're not going
to, like, invent a vaccine, they're not going to, like, run a mile in
under four minutes. They want fame, have a Bravo television camera
come, and the whole thing is now about gaining celebrity, not doing
something substantive and getting celebrity after.

SENOR: I would say this is probably not the administration's
fault. And I agree with you, also, that the Secret Service is probably
going to get a bum rap here. But to the extent that there's a big
discussion going on right now, people starting to question the
competence of this administration, certainly on the heels of this China
trip, that people are raising big questions about the competence, how
this Afghan review strategy was run -- this is not the administration's
fault, but ...